Accounting and Billing is not the most fun part of being a freelancer but it’s kind of important if you want to keep being a freelancer who lives in a house and has food. We’ll try to keep it from getting too boring.
Some developers will come to you with a completely defined list of audio assets they need for their game, but more often developers really don’t know what they need. This is especially true of sound effects. They often don’t really know what their game will need as far as sound goes. Some might even expect you to play the game and come up with that. What do you do in this situation?
I personally have no problem doing this. If its a giant game, I do incorporate a fee for my time of making the list into the quote. I try to at least give a ballpark quote to begin with when a set list of items is not clearly defined. Once you’ve officially agreed and started the job though, you have to deal with the wonderful thing that programmers call “creeping requirements”.
Handling Creeping Requirements
I often agreed on a set price for a game and then half way though the developer says, “we just added a new boss, so he needs theme music and growling sounds.” Now what? Am I just supposed to give them these sounds for free? Do I demand more money right then and there?
Here’s how I deal with this situation. If the game is still in a nebulous form, I ask for an upfront fee, maybe 25% of the expected cost of the entire project. Then I make a Google Doc with two tabs. Initial quote and expected assets, and one of Actually Delivered assets.
Both have columns for prices. As things change, I add them to the delivered asset list and the developer can see how much he’s spent of his initial payment and when he’s going above the original quote. You can even add some nice “You have paid:” “You owe:” columns to show them where you are.
If it’s one or two small sounds, sometimes I’ll just throw them in. But this method is a fair way to keep everyone on the same page without constantly haggling over prices.
How Much To Charge?
This is a loaded question. But break it down like this; How much time does it take you to create a song? Or make a sound effect? How much is your time worth? I start by establishing an hourly rate and then how many hours it takes you to do something. You will have to evaluate what is worthwhile to you and also compare with competition at your level. It’s going to be different for everyone.
How Do I Get Paid?
Every company and developer is different. Most are fine with PayPal or Bitcoin. Some will want to do wire transfers or send checks. You should know how to get your checking account routing information from someone so they can wire you money. Sites like eLance also use PayPal to transfer money, so at bare minimum you need to have a PayPal account set up.
I tried to think of some colorful way to talk about accounting that isn’t boring, but I can’t. It’s boring, it’s annoying and tedious, but you have to do it. Here’s what an Accountant will likely ask you for if you are working as a freelancer as a sole proprietor.
You should make an Excel doc and keep track of these throughout the year. I update mine every two months or so.
- Self Employed (Sole Proprietor) Income Total
- Total W2 Income (w2)
- Spouse’s Income
- Advertising – Paying for Ads or Promos
- Contract Labor – Subcontractors, Tech Support, Etc
- Purchases Over $200 – Programs, computers, hardware
- Legal – Contract, Attorney, Lawyer Costs
- Domain, Logo, Art – Web site hosting, logos, album covers, etc.
- Office Expenses – Paper, pens, ink, other items
- Utilities – Electricity, Rent % (talk to your accountant)
- Communication – Phone, Internet
- Donations – Donations to Church, Non-Profit’s, etc.
Some USA-specific details here:
Don’t forget to send quarterly earnings checks. Your accountant can help you estimate what to send. This helps you avoid fees at the end of the year and you might even get some of it back.
Bug your accountant if he says you can’t expense some of your rent. If you have a dedicated room where you only do music and business, you can expense a portion of your rent based on how much of the square footage of your house’s floorspace that room is equal to.
It’s good to put about 20-25% of what you make aside for taxes. Remember, when you report it and pay your taxes, it goes towards your social security/retirement and in the long run it’s really in your best interests in case you ever get audited or something.